Honesty up front ensures hassle-free insurance claims

For cash-strapped consumers forced to tighten their belts in the current climate, it may be tempting to try and get cheaper long-term insurance cover by omitting vital information during the application process.

But Dr Maritha van der Walt, Convenor of the Medical Underwriting Standing Committee of the Association for Savings and Investment South Africa (ASISA), cautions that this short-sighted approach is likely to leave clients or their families without cover when a devastating life event occurs.

The risk of non-disclosure

Dr van der Walt explains that a life insurance company is fully within its rights to reject a claim and declare a client’s policy void if it finds the client was dishonest or didn’t disclose important details when they took out the policy.

Life insurers assess all claims objectively and fairly and a decision to reject a claim or to void a policy is never taken lightly, but clients can avoid problems at claim stage by fully disclosing all required information when taking out a policy.

When in doubt, rather disclose

‘If you’re in doubt about whether information is important or not, rather disclose it and let the underwriters decide whether it’s material,’ Dr van der Walt advises.

Depending on the information disclosed, a life insurer may request a medical assessment to determine the severity of a condition. For example, if a client mentions that they suffer from chest pain, the insurer will require an assessment to determine the client’s risk of suffering a heart attack. If the client discloses that they’re scheduled for any medical investigation within a couple of weeks, the company may delay issuing a policy until the results are known.

If the client’s medical condition or lifestyle choices are considered a material risk, the life insurer may offer the cover on different terms, such as a higher premium or exclusions on disability cover or critical illness benefits. In a small percentage of cases, an application is declined.

While it may therefore seem tempting to keep quiet about ailments or pending medical investigations, a claim for a condition that was subsequently diagnosed as a result of the investigations might be declined. ‘Rather be honest – if your cover is declined then you can at least plan ahead for the financial impact should something happen,’ Dr van der Walt says.

Even if the client doesn’t qualify for comprehensive life cover, for example, they can apply for accidental death cover, which only pays out in the event of death as a result of an accident.

A growing range of products are also available to people living with the human immunodeficiency virus (HIV), including life, disability and critical illness cover. South Africa was the first country to introduce life cover for people living with HIV in 2001.